Hungary: Farming Cooperatives (1992)

This document has been made available in electronic format
     by the International Co-operative Alliance ICA

                      FARMING CO-OPERATIVES

Source : Janos Juhas :  Co-operatives in Eastern and Central
Europe, Hungary; Studies & Reports, Twenty-first in series;
ICA, Geneva, 1992, 61pp., price 12 CHF

Farming co-operatives in Hungary belong to the agricultural
workers production category of co-operative. In the 1960s and
70s, members were obliged by law to turn over their land to
the co-operatives for joint cultivation. However, they
retained the ownership of the land, at least in legal terms.
Initially, other means of production were also contributed by
the members against symbolic compensation. Nowadays, farming
co-operatives own and use a high-value stock of assets
accumulated from their production activity over the course of
many years.

Although the original function of the farming co-operatives
was to create a uniform structure of large-scale common
farming, members' individual small-scale activities have
always been present. From the very beginning members were
allowed to keep a small plot of land for family cultivation.
The size of this plot was limited to about half a hectare.
Similarly, the livestock reared by individuals was also
strictly limited in the early years of collectivization.
Together, these constituted the so-called `household plot' of
farming co-operative members. The institution of household
plots was meant to be a temporary gesture to facilitate the
transition to an entirely collective way of farming. However,
the household plots survived, and currently receive political
support as an important form of small-scale farming.

Correspondingly, the ideal type of farming co-operative has
also adopted new features which differ from those of the
original model. Instead of exclusively large-scale farming
they have come to be considered as production organizations
combining both large- and small-scale activities. The model of
farming co-operatives has therefore been composed of two
parts: namely, the joint or common farm and a great number of
household plots or, to use the better term, household farms.

Both are commodity-producing organizations, and it is the duty
of the common farm to "integrate" the activities of the
small-scale family-based household farms. Assistance in terms
of use of machinery (e.g. ploughing, spraying, etc.),
transport, provision of inputs, extension, marketing, etc. has
been provided to small-scale farmers in many farming
co-operatives. Collaboration between the common and household
farms has taken various forms. The general concept prevailed
that a particular type of "symbiosis" should and oould develop
between them. This symbiosis was the basic$characteristic of
what used to be called the "Hungarian model" of agrarian

The farming co-operatives have grown to become rather large
enterprises in all respects. Today the land area cultivated by
the average farming co-operative amounts to some 4000
hectares. The number of those who have a full time job in the
co-operative is 377, of whom 282 do manual work. Not all of
them are members of the co-operative, however, 263 are
co-operative members and 114 are employees. Clearly, farming
co-operatives utilize a significant amount of hired labour. On
the other hand, they have a considerable number of retired
members who retain their full membership but no longer
participate in the joint work. Their relationship to the
co-operative in the field of farming is limited to the
household farm, which remains theirs after retirement. This
link, however, may be quite important from the points of view
of both the co-operative and its member. The average farming
co-operative has a total membership of 551 people, of whom as
many as 288 are pensioners and annuitants, and put in 78
thousand ten-hour working days in 1989, i.e. 227 working days
per capita.

In the same year, an average farming co-operative reared the
following livestock: 794 cattle (298 cows), 1,936 pigs (147
sows), 934 sheep and 5,055 poultry. Its machinery included 32
tractors, 19 lorries and 7 combine harvesters with a total
hauling power of 5,301 kW. The total gross value of its fixed
assets amounted to HUF 230 million, and it had a gross
production value of HUF 239 million. In this sector, losses
have been more frequent than profits in recent years. In 1989,
the per-co-operative profit came to HUF 17 million, while the
respective figure for losses reached HUF 22 million.

Specialized Agricultural Co-operatives:

Specialized agricultural co-operatives are different from both
the promotion and the production co-operatives, representing a
kind of intermediate type between these. They are considered
specialized for two reasons. On the one hand, they focus on
some special crop, most often grapes. On the other hand, their
membership relations are also special. These co-operatives
have maintained not only private ownership but also the family
cultivation of the land. Only a small part of the members'
land is pooled to create large-scale joint plantations.
Primary production is carried out individually by the members
and the main function of the co-operative is  joint processing
and marketing of its members' produce. Accordingly, members
are not obliged to participate in the cultivation of the
common plots, though specialized agricultural co-operatives
were also intended to create a gradually-increasing joint
farm. Indeed, the long-term economic political objective
concerning specialized agricultural co-operatives was to
transform them into farming co-operatives.

However, the model of specialized agricultural co-operatives
has survived and at present it has the following main
quantitative characteristics: the specialized agricultural
co-operatives are much smaller enterprises than the farming
co-operatives. The average co-operative has about 1,100
hectares, and 582 members. It has 207 full time employees,
some of whom are also members. The number of manual workers is
167, and the total man-hours performed in 1989 amounted to
460,000, i.e. 221 working days per capita. Since specialized
agricultural co-operatives are mainly involved in crop
production their animal husbandry is of less significance. In
1988, the average was 129 cattle (44 cows), 99 pigs (7 sows),
1,566 sheep and 1,810 poultry. As to their machinery, the
average was 13 tractors, 12 lorries and 3 combine harvesters
in 1989. Together these represented 2,196 kW hauling power.
All these figures refer, of course, to the common farm of the
specialized agricultural co-operatives.

Agricultural Associations:

The third important co-operative model existing in Hungarian
agriculture is that of the agricultural associations. Although
they are not independent legal entities, these represent an
autonomous model of agricultural co-operatives. Agricultural
associations came into being as a special activity of consumer
co-operatives aiming to promote the agricultural production of
part-time producers. They have been organized mainly according
to the commodities with which they deal. Most of them deal
with a specialized area of animal husbandry. Many are involved
in pig breeding, but there are a lot of poultry breeding and
crop producing associations, too. Among the latter, the fruit
and vegetable producing ones are of significance on the
national level. It is a very specific feature of the
agricultural associations that the production of small animals
such as pigeons or rabbits, of which remarkable quantities go
to export markets, is done almost exclusively in their
framework. The basic data for the agricultural associations is
given in the table below: 

          Agricultural associations operating in the
          framework of consumer co-operatives (1987)

                    Number of      Number of Value of joint 
                    associations   members   sales, mi.HUF
                                             Animal husbandry

Pig breeding             234       45,274       2,381

Rabbit farming           722       29,784         613 

Poultry and
egg production            65        2,129         634 

Goose fattening           28        2,446         630

Pigeon breeding           52        1,469          11

Rearing of other
small animals             64        3,847         187 

Bee keeping              438       17,750         610
Sub-total              1,603      102,699       5,066

Wine, fruit and          180       22,340         263

vegetable production     
Other                    472       47,583       1,131  
Sub-total                652       69,923       1,394

TOTAL                  2,255      172,622       6,460

The agricultural associations aim to assist the production of
their members. In addition to purchasing members' products
they provide production materials, seeds, pesticides,
fertilizers, etc. They have no common land area, but do have
joint property in the form of machinery, equipment and
buildings. Various services, mainly the use of machinery, are
provided to the members at favourable rates. 

It is very important to note that the agricultural
associations have extended their activities. Associations
belonging to consumer cooperatives no longer limit their
membership to those who are full-time farmers. Members may,
and do, join them in the capacity of household farmers, i.e.
with part-time farms. Agricultural associations have been
established by farming co-operatives, specialized agricultural
cooperatives and, indeed, by state farms, too. The membership
of the associations is not restricted to the members or
employees of the mother organizations. As a result,
agricultural associations nowadays operate within the
framework of all large-scale farms and consumer co-operatives
and have mixed membership. It is also worth mentioning that a
large part of the agricultural associations' production would
appear in official statistics as large-scale operations. The
reason, beyond the technical difficulties of keeping accurate
records, is the fact that large-scale enterprises look upon
agricultural associations as special forms of work